COVID-19 drags the national health insurance scheme back into spotlight

HEALTH   VIRUS

Healthcare had already been too expensive for the average Ugandan, but the COVID-19 pandemic has taken the cost of health care to the highest levels ever. Several Ugandans and policymakers now say it is time to hasten the stalled National Health Insurance Scheme (NHIS). 

Uganda had 31,910 confirmed positive cases of COVID-19, with 10,646 recoveries and 238 deaths by December 22nd.   

In a recent tweet, Judith Nabakooba, the Minister of Information and Communications Technology and national guidance revealed that COVID-19 treatments set patients back by sh5m every day. 

This is about 26 times what Ugandans spend on health care, minus the COVID-19 now. The annual per capita total health expenditure is $53 (sh193,560), according to the National Health Accounts report FY2014/15 and 2015/16. This was below the recommended minimum of $84 (sh306,776). 

The report also showed that 41% of health expenditure was by individuals who spend out of pocket. Donors contribute 37%, and government contributes between 15%-17%. The rest, a small minority, is through pre-payment mechanisms, such as formal health insurance and informal communal health insurance mechanisms. 

Evelyn Ankunda, a restaurant worker said that the NHIS would be especially helpful to pregnant mothers who have lost jobs and sources of income due to the COVID-19 pandemic and measures to curb it. 

"Pregnant women need a lot of help. Some of them do not have money and they go through a lot," she explained. 

Silvano Kibuuka, a communications specialist said that the NHIS is needed now more than before because several Ugandans are falling sick and yet several have lost jobs and businesses because of the COVID-19 pandemic. "People have to pay highly for medication and yet they have lost income. I think it is high time to look at health insurance," he said.   

Once the NHIS becomes law and supporting regulations come into effect, it will be mandatory for employees in government and the private sector to contribute 4% of their gross salary, while the employer tops up with another 4%. 

If both spouses are employed, both shall be required to remit to the scheme which shall be run through private health insurance companies. This NHIS cards will entitle the worker to a health insurance package that will extend to five other dependents, including their spouse. 

Vulnerable people such as poor orphans, people with disability, street children, and individuals above 18 years of age but still studying and unemployed among others will access free health insurance cover. 

Alhaj Kaddunabbi Ibrahim Lubega, Chief Executive Officer of the Insurance Regulatory Authority (IRA) of Uganda noted that in June 2019, the NHIS bill was approved by Cabinet and subsequently tabled before Parliament. 

The bill was referred to the Parliament's Health Committee chaired by Hon. Dr Michael Bukenya for input from various stakeholders. 

"As a critical stakeholder representing the views of the Insurance Sector, the Insurance Regulatory Authority of Uganda advised that an immediate actuarial study should be carried out to determine the contributory rates for employees, employers and those in the informal sector under the NHIS," Kaddunabbi said. 

"To date, the discourse on the bill has not yet been concluded. Little did we all know that in the following year 2020, we were set for a health crisis, the novel COVID-19 pandemic, which has heavily disrupted the global health system," he added. 

He pointed out that the NHIS will bolster Uganda's attainment of Sustainable Development Goals and specifically goal 3 which aims at ensuring healthy lives and promoting the well-being for all and at all ages, ending poverty and reducing inequalities. 

Kaddunabbi pointed out that the pandemic has created a toll on the health sector significantly causing a drastic change in the lives of Ugandans who have to adapt to the new normal and practices in order to stay safe. 

"The worrying situation this pandemic has caused will undoubtedly affect our Health Financing Strategy 2015/16 - 2024/25, which came at the time of the global commitment towards Sustainable Development Goals (SDGs) and Universal Health Coverage (UHC)," he said. 

"Whereas government has set the right direction in developing the NHIS Bill, it's time we expedited the process. Many countries have already established such schemes to raise resources for health and ensure access to health care through financial risk protection," Kaddunabbi explained. 

According to the IRA's COVID-19 Impact Survey for the Insurance Sector in Uganda, insurance firms unanimously agreed to support government efforts in preventing the spread of COVID-19 by making an exemption to the standard policy terms and conditions (pandemic exclusion) and admitting valid claims for medical expenses for the treatment of insured patients infected with COVID-19.  

This benefit included waiving of any cost-sharing (co-payments) related to testing and treatment of COVID-19 cases, waiving of penalties, restrictions, and denials for out-of-network care and prioritizing COVID-19 related payments by insurers and Health Membership Organizations (HMOs). 

However, this benefit accrued to only about 1% of Ugandans who have health insurance, mostly through their employers. The NHIS would expand these benefits to nearly half the Ugandan population. 

Kaddunabbi said that operationalizing the NHIS will stimulate providers to avail good quality, accessible and affordable healthcare, as well as increase welfare gain in healthcare and ensuring that everyone has financial access to health care. 

He said that the major principle in a health insurance scheme is to promote social solidarity and pool resources for the rich to subsidize the poor, the single to subsidize already established families, the healthy communities to subsidize the unhealthy and the young working population to support the old to enable them access health care. 

"Whereas the uptake of insurance is relatively limited, we can confirm that the community and village-based health insurance initiatives have supported a segment of the populace. We, therefore, need to appreciate that the NHIS will address the needs of the underprivileged, under-served, and most vulnerable communities," Kaddunabbi said.  

He pointed out that this pandemic should awaken the discourse on how our health systems should build the required resilience to withstand such shocks.  

Insurance set for faster growth in the aftermath of COVID-19 

Insurance usage is still low in Uganda despite the stable economic growth in recent years with penetration at 0.83% in 2018 compared to regional peers even though it has been continually rising over the last couple of decades. 

A May 2019 perception survey by the IRA pins the low penetration on a number of reasons such as the blurred image of the insurance sector due to misrepresentation and mis-selling practices, the excessive bureaucracy and "documentation", the legal and complex jargons used in insurance contracts, customer care issues once a purchase has been concluded, and the intangibility of insurance, among others. 

COVID-19 may improve fortunes for Uganda's insurance sector according to Ramathan Ggoobi, an economist and lecturer at Makerere University Business School (MUBS). While making a presentation at the 47th virtual CEO's breakfast meeting under the theme, "Insurance at the Dawn of COVID-19: Analysis of current challenges, responses & opportunities for Insurers in the New Normal", Ggoobi emphasized that COVID 19 was a great breeding ground for innovation. 

"Reconsider not only processes, products and services you are offering but also the operating models to seize the new emerging opportunities. Chances of the insurance sector picking up are higher compared to other sectors," he said. 

"The fact that people have now realized that life and health are more important and that the opportunities that the pandemic brings like embracing of digital usage are among the factors that explain the likely quick pick up that the insurance industry should ride on," he added.  

Ggoobi noted that Uganda's economy had been hard hit with between 140,000 to 180,000 formal jobs potentially being lost, and with between 2.3 to 3 million livelihoods made vulnerable due to the existence of the pandemic and that several Ugandans now appreciate the efficacy of insurance. 

His assertion is supported by industry statistics. Although the insurance industry initially suffered due to the COVID-19 with a total of 3,005 policies that lapsed, were surrendered or cancelled between the period January-June 2020, the industry registered positive growth of 7.78% growth in Gross Written premiums at the end of June 2020 over a similar period in 2019. 

It was interesting to note that proficiency in the operations of insurance companies improved during the study period through the adoption of digitally enabled operations, which in part, resulted into a drop-in management expenses ratio by 12.37%. 

On a quarterly basis, the insurance industry continued to sustain growth at 9.75% with sh746b in Gross Written Premiums in the third quarter of 2020 from quarter two.   

Non-life insurance picked to 7% compared to 3.42% in the previous quarter, while Life Insurance slowed slightly to 19.05% from 20.56% in quarter two. HMOs slackened to 0.02% growth from 3.88% in quarter two while the Micro Insurance recorded the biggest progression at 1437.92%. 

Bancassurance continued to write more premiums for the insurance industry as its Gross Written Premiums (GWP) expanded by 58.11% (sh52b) representing 6.36% of the total industry GWP. 

Overall, the market composition was slightly constant with Non-life Insurance dropping to 64.107% from 65.03%, Life share expanding from 27.9% to 29.020%, HMOs slightly reducing from 6.93% to 6.828% while Micro Insurers previously at 0.039% expanded to 0.046% all these compared to quarter two of 2020. 

 Jubilee, UAP-Old Mutual, Sanlam, Britam and ICEA are at the helm of Uganda's insurance industry according to data from the IRA.